INDIANAPOLIS - State Auditor Connie Nass noted today that the news of higher than anticipated state tax revenues for the first quarter of the 2005 fiscal year should not be used to obscure the reality of Indiana government’s deep financial hole. “Whether the monthly portion of tax revenue forecasts are met or exceeded – certainly the preferred results – you have to look at Indiana government’s bottom line to truly gauge whether its fiscal outlook is getting better,” stated Nass.

“State government’s General Fund Surplus Statement remains in the red, ending the first quarter of this fiscal year at a negative $640.4 million.” At the end of September 2003, the State’s General Fund and Property Tax Replacement Fund Surplus balance was a negative $416.4 million, putting Indiana government’s present bottom line $224 million below the same point last year. This reflects a steady six year downward trend (see chart below).

“For three consecutive years, with the exception of June 30 of each year when a ‘Surplus’ has been generated through the use of payment delays and accounting gimmicks, your state government has ended every month with a negative balance in its General Fund operating accounts. Last June was the first time in memory that payment delays were actually necessary to end the fiscal year in the black. In reality Indiana government ended the 2004 fiscal year over a quarter billion dollars in the hole. And next June 30, the end of this fiscal year, State government will again almost certainly need to resort to payment delays, loans, and other accounting gimmicks to generate a ‘Surplus,’” stated Nass.

“State government must reverse this trend. No one can reasonably expect Indiana government’s fiscal mess to be cleaned up in one month, one quarter, or even one year. It is going to take time. But when confronted with a bottom line that is progressively worse year after year, quarter after quarter, and month after month, Hoosiers need to realize that their government is still headed in the wrong direction.”

The data supporting the chart above are as follows:

Monthly Surplus Reports and other information on State Government’s finances are available online at www.in.gov/auditor/publications.